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June 25, 2012

Microsoft and the 7 classic management mistakes

Like many of you, I’m fascinated by the constant news coming out of the tech world. Maybe it’s a by-product of working out of San Diego and working with many tech companies. One of the most interesting things to watch is the lightning-quick pace of change in the tech industry that challenges business leaders and managers. Even the most well-respected companies have problems keeping up.

Take Microsoft, a world-leading company that has struggled to match competitors in some areas. Last week, the tech titan again upped the ante with the announcement of its first tablet, the Surface, as well as other announcements that took the tech world by storm.

Unfortunately, the timing speaks to a disappointing trend the company has faced for more than a decade: It’s constantly playing catch up with both Apple and another Silicon Valley darling, Google.

Microsoft isn’t alone. In this fast-paced, tech-savvy world, many tech companies find themselves lagging behind competitors. Oftentimes, it’s a result of one or more of these classic management mistakes. Which ones do you think Microsoft fell victim to?

1. Failure to develop a sense of leading indicators

What are the trends within your industry? What are your suppliers, customers, even competitors doing or looking at? By identifying those, you’ll be able to provide insight into what lies ahead for your business. Spot the trends early to position your business to take advantage of the better margins and profits associated with earlier stages of new innovations.

2. Failure to manage cash flow

How are you managing your cash flow?

It’s counter-intuitive to many non-financial folks, but growth often equals a shortage of cash -- not more. That means when you are in a position to grow your business quickly, you need to be planning your cash flows as well. If not, you will find yourself unable to respond to new market opportunities or to competitive challenges.

3. Failure to communicate the core mission

Open communication is the foundation to effectively run any business, regardless of the industry. It starts with understanding what your business’ core mission is -- why did you start the company, what is its purpose, and do your employees know where you want it to go? Make sure you’re being open with employees and key customers about actions your business is taking, how those actions relate to your core mission, and how they enhance the company’s competitive and financial position.

4. Failure to act quickly

Paralysis by analysis is painful.

This happens when management pours excessive time into analyzing a problem, rather than taking action toward fixing the problem or finding an alternative strategy. If something goes wrong, rectify the situation immediately. The time to figure out why the problem occurred is later.

5. Failure to have a viable plan B

Most well-run businesses have a contingency plan -- what do you do if sales suddenly drop, for example. What is your plan B? For those who don’t have one, spend the time creating one. Those who already have a contingency plan should make time to revisit it regularly and make sure it is up-to-date and evolves as your business grows and changes.

6. Failure to play offense instead of defense

While we discussed the importance of planning for the worst, you can’t run your business with the idea in mind that things will go south. Therefore, it is important to have an offensive strategy in place to advance and grow your business. By having success on your mind and constantly strategizing your next move or moves, you’ll achieve just that.

7. Failure to pay attention to competitor changes

It’s OK, in fact, it’s encouraged, to keep tabs on what your competitors are doing, especially anytime there are dramatic changes in the environment. Whenever that occurs, there are almost always opportunities for you and your business to capitalize on. On the flip side, if you don’t pay attention to competitor changes, you might wake up one day and find there is a new sheriff in town.

As you can see, many of these classic management mistakes are firmly rooted in common sense, yet many businesses still fall victim to them, even the best and brightest like Microsoft. Remember these deadly mistakes as you manage your business. Read them regularly and good luck!

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